ostrichism

When lying down and hiding from predators, the birds lay their head and neck flat on the ground, making them appear as a mound of earth from a distance. This even works for the males, as they hold their wings and tail low so that the heat haze of the hot, dry air that often occurs in their habitat aids in making them appear as a nondescript dark lump. (link)

I will still use that as a metaphor for financial behavior, though – it’s just too useful to discard. I know that I’ve been guilty of ostrichism recently. Although I’ve paid a lot of attention to what’s going on in the markets, I’ve also engaged in a certain amount of avoidance. I haven’t started insisting that we turn off all the light and huddle in one room, or save aluminum foil, or hoard food scraps. I assume that this is a glitch and at most we might be inconvenienced by the downturn in our stock portfolios.

To become a successful investor in the broad-average sense of the word (an index fund investor who doesn’t try to out-Buffet Buffet), you need to be able to put your head in the sand from time to time. You need to shut out the screaming and self-flagellating TV personalities and realize this: a stock market correction is a stock market correction. People are still going to their jobs: assembling cars, processing invoices, filing claims and flipping burgers. Very little of that has changed. If you want to pretend that stock market fluctuations are affecting the ability of the nation to get up, go to work and grab a coffee along the way you can go ahead and think that way, but the reality is that life goes on. Stick your head in the sand. If you were happy with what you were doing in terms of investing and saving, stick to it.

6 comments

It doesn't sound like you, Steve, but I agree completely. You either have to assume that this is a temporary retrenchment like we've seen 4 or 5 times over the last 30 years, or that the entire financial model has broken down, in which case it would take several decades of mass confusion before another model took its place. If it's the latter, we all have much more serious problems than worrying about saving for retirement. Without a lot more calamity, I strongly believe it's the former.

I'm thinking that pretty much the worse that is likely to happen is that money invested in 2006 (say) won't see a +ve return for 20 years. Money invested earlier and later will probably not do too badly. I've got 40 years until retirement, and my parents have final salary pensions anyway, so I'm not too worried about that.

Rampant inflation or deflation would be more of a concern, but people got through the 1970s, right?

I think everyone agrees with you, even up to that last line. And that's where people's problems lie.

“If you were happy with what you were doing…” Now people see the market tanking and feel like they did something wrong, didn't pick the right funds or stocks, etc. So they have to do something else. When all they should really do is stick their head in the sand.

This was a great post! There is so much turbulence in the market today, and people need peace of mind more than ever. I wanted to offer your readers a link to another blogger who is doing great work. He writes about our 'childhood money messages' and how the best approach to stability in today's market is to resist letting these emotions control our buying/selling habits. It is really fascinating work, and something you should all check out. His name is Spencer Sherman, and you can view his blog at http://www.curemoneymadness.com/blog.

This was a great post! There is so much turbulence in the market today, and people need peace of mind more than ever. I wanted to offer your readers a link to another blogger who is doing great work. He writes about our 'childhood money messages' and how the best approach to stability in today's market is to resist letting these emotions control our buying/selling habits. It is really fascinating work, and something you should all check out. His name is Spencer Sherman, and you can view his blog at http://www.curemoneymadness.com/blog.

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